Opinion

A growing chorus of informed voices is calling for change in the U.S. patent system. Some charge that huge companies protect their markets with massive portfolios of broad patents. A newcomer with limited legal resources, facing the threat of perpetual litigation, could feel compelled to cross-license or even abandon its technology. That punishes innovation instead of rewarding it, violating the very purpose of patents.

A growing chorus of informed voices is calling for change in the U.S. patent system. Some charge that huge companies protect their markets with massive portfolios of broad patents. A newcomer with limited legal resources, facing the threat of perpetual litigation, could feel compelled to cross-license or even abandon its technology. That punishes innovation instead of rewarding it, violating the very purpose of patents.

Others decry patents so broad as to be meaningless, or so deeply contaminated with prior art they cover the work done years  or decades  earlier. Critics see a system broken, unable to keep pace with either the rush of innovation or the increasing specialization of our technical world. More cynically, some see a government agency in the pocket of big business and patent lawyers. Does the system need major reform? Or should we abandon it altogether as fundamentally flawed? We asked patent attorneys and got very different views. Ron Wilson reports.

It ain't broke, so don't fix

Richard Ogawa and Gregory Bishop, attorneys in the Palo Alto, Calif., offices of Townsend, Townsend & Crew, see today's patent process doing the job as expected. "The purpose of the system is to promote science and the useful arts," Ogawa said. "If you look at the electronics industry today, it is very successful and productive. On that basis, I don't think you can say that the system is broken."

"It's easy for the uninitiated to point out problems in the current system," Bishop said, "but it's hard to envision a system that actually would work better."

"A lot of people have reacted to things that happened in the past," Ogawa continued. "Even the FTC report everyone mentions cited issues with five-year-old patents. It was not a reaction to the actions the patent office has taken since that time to correct things.

"For instance," Ogawa said, "it's a common complaint that there are too many method-of-business patents. But, in fact, the rate of acceptance on new method-of-business patents has dropped to about 14 percent. I believe today they are doing a pretty good job."

Similarly, when it comes to prior art, Ogawa said, "Lately the office has been much better. . . . But to be fair, that is also a responsibility of the applicant  they must disclose any known prior art. And with patents from the U.S. and Europe and Japan searchable by computer now, that's much easier than it used to be."

Far from being a broken system in need of repair, the two attorneys say, the U.S. system is becoming the model  and in some sense the clearinghouse  for the industrializing world. "As trade increases, China, Japan and India are all moving toward the U.S. system for patent law," Ogawa said. "And the pattern of litigation has changed dramatically as well.

"Once, there were a few high-profile cases in which U.S. companies litigated in U.S. courts or before the International Trade Commission against Asian companies. Now, companies in Japan, Korea and Taiwan hold huge portfolios of patents themselves. We are seeing Asian companies fighting each other in U.S. courts over patents they hold here."

The attorneys added that we have seen the emergence of pure-play IP companies  an entire business model that could not function without a working patent system. That is not a picture of a broken system, Ogawa and Bishop said. Perhaps, Ogawa suggested, the attacks on the patent office are really "about the maturity of the electronics industry, and the flattening out of the rate of real innovation."

'Restore balance'

For Gary Reback, attorney in the litigation practice group of Carr & Ferrell LLP in Palo Alto, Calif., the question is how much protection the patent system should provide. "A significant body of people now believe that the U.S. Patent and Trademark Office is not performing its intended role," he argued. "Most people will agree that the right amount of patent protection is very important to innovation in our economy. The system was intended as an incentive to reward innovation, not as a hall pass around the free market.

"Nearly everyone agrees that there are procedural issues that have made the situation worse. For example, there has been insufficient research of prior art during the examination process. But discussing procedures is just a dodge to avoid talking about the fundamental issue: the right amount of protection."

The problem is not endemic, Reback argued. "Until the 1980s, I think the patent office struck a good balance. In part that was because in the 1970s, the courts had been rather anti-patent. It was very hard for the plaintiff to win an infringement case. Legal conservatives worked to turn this around.

"But about that time, some large companies realized that their patent portfolios could be sources of significant revenue. They began to use the system and the new attitude of the courts, to the point that today the patent office treats applicants as customers to be served, and the prevailing attitude is 'The more patents, the better.' Now the system has become so bad that it's even hurting the big companies who were exploiting it. We have to restore balance."

As a corrective, Reback cited suggestions in the Federal Trade Commission report of a few years ago. "We first have to deal with the 'thicket', as the FTC called it, of patents that are already out there. There must be truncation. It would also help to swing the court pendulum back the other way, so that litigation is less certain for patent-holders. That in itself would eventually discourage . . . the filing of poor patents.

"An important part of the process is education. Electronics is not well understood inside the Beltway, and frankly, the industry has made no sustained effort to educate people there. The big companies, naturally, work to protect what they see as their interests in the system. The first step in repair is a wider, more-informed public debate."

Ron Wilson is semiconductors editor for EE Times. He can be reached at rwilson@cmp.com.